Sabyasachi Mukharji, J. - (1.) This reference under Section 256(1) of the I.T. Act, 1961, poses before us the following question ; " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that by virtue of the provisions of Section 10(27) of the Income-tax Act, 1961, the losses on account of breeding of horses and pigs amounting to Rs. 74,065 and Rs. 19,918 respectively are not admissible deductions in computing the total income ?"
(2.) The reference relates to the assessment year 1965-66. The assessee, M/s. Royal Calcutta Turf Club, claimed a loss of Rs. 74,065 in Broodmares Account and Rs. 19,918 in Pig Account. The ITO, however, did not allow these losses because according to him the incomes from these two heads were exempt under Section 10(27) of the I.T. Act, 1961. It may be instructive to refer to the fact how the ITO had dealt with this aspect in the assessment order. In the assessment year dealing with the computation of business he has added certain amount and one of the additions made by him was as follows : Rs. "Loss claimed in Brood-mares Account disallowed in view of section 10(27): of the Act, 1961, as inserted by Act 5 of 1964 74,065 and the other head was as follows : "Loss claimed in Pig a/c. disallowed in view of section 10(27) of the Act as instituted by Act 5 of 1964 19,918"
(3.) He thus arrived at the total income of Rs. 8,96,232 after taking into consideration the business income of Rs. 5,79,577 and other income.;